Disney's Dual Engines: Streaming and Theme Parks Drive Strong Quarterly Earnings

Walt Disney reported its fiscal 2026 third-quarter results (ended June 27) before U.S. markets opened on Wednesday (5th). Boosted by strong box office sales from 'Toy Story 5,' improved profitability in its streaming business, and robust demand at U.S. theme parks, the company's adjusted earnings per share (EPS) exceeded Wall Street expectations, driving pre-market shares up over 4%.

As of press time, Disney (DIS-US) shares rose 3.89% in pre-market trading, temporarily reaching $102.00 per share.

Disney's third-quarter revenue increased 7% year-over-year to $25.2 billion, slightly below the $25.4 billion analyst consensus estimate compiled by FactSet and LSEG. However, adjusted EPS surged 28% to $2.06, significantly surpassing the market expectation of $1.86. Operating income reached $5.56 billion, exceeding the $5.24 billion forecast compiled by Bloomberg, marking the second consecutive quarter of better-than-expected profits.

This is the first earnings report since Josh D’Amaro succeeded Bob Iger as CEO in March this year. In his letter to shareholders, D’Amaro emphasized the company’s continued investment in core IPs like 'Toy Story,' extending the influence of popular franchises from theaters to streaming, consumer products, and theme parks.

The success of 'Toy Story 5' extends beyond box office revenue, driving merchandise sales, boosting viewership on Disney+, and increasing foot traffic at theme parks. However, not all films performed well; 'Star Wars: The Mandalorian and Grogu' underperformed, and the live-action 'Moana' fell short of box office expectations, likely dragging down the entertainment division’s performance in Q4. Weakness in the U.S. streaming ad market could also pose ongoing pressure.

On the same day, Disney announced a partnership with TikTok, allowing TikTok creators to use characters and clips from Disney’s films and TV shows in short videos. This marks TikTok’s first such licensing agreement with a traditional media company.

The Experiences segment, which includes theme parks and cruise operations, reported third-quarter revenue of nearly $10 billion, a 10% year-over-year increase, with operating profit rising 20% to $3.02 billion. Global park attendance increased by 4%, with a 3% rise in U.S. parks. Visitor spending remained strong at California and Florida locations, with Walt Disney World in Orlando particularly standing out.

This performance alleviates market concerns that U.S.-Iran tensions, rising oil prices, and weakening consumer confidence might dampen travel demand, contrasting with Comcast’s (CMCSA-US) Universal Studios in Orlando, which saw demand slow in June. The Experiences segment’s profit includes approximately $100 million in tariff refunds.

The Sports segment reported third-quarter revenue of $4.5 billion, but operating profit declined 17% year-over-year to $858 million, below Wall Street expectations, due to the timing of broadcast rights payments and multiple sweeps in the early rounds of the NBA playoffs.

Disney confirmed it will sell its stake in A+E Global Media to its joint venture partner, Hearst Communications, for $1.2 billion. The proceeds will be used for share buybacks, increasing the total fiscal 2026 stock repurchase program to at least $9 billion.

The company projects fourth-quarter segment operating income at approximately $4.9 billion, roughly in line with initial market expectations, and stated it continues to implement cost-control measures, including layoffs and administrative expense reductions.